Flag of Serbia

Serbia country brief

General

Serbia is a country of 7.4 million (2011 est.) occupying 77,474 km2 in the Western Balkans. It is bordered by Hungary, Romania, Bulgaria, the former Yugoslav Republic of Macedonia, Kosovo, Montenegro Bosnia and Herzegovina, and Croatia. The capital of Serbia is Belgrade.

Bilateral relations

The relationship between Australia and the Republic of Serbia has its basis in strong community links. In the 2011 Australian Census, 69,540 people identified themselves as having Serbian ancestry and 20,266 listed Serbia as their place of birth. Australia has maintained an embassy in Belgrade since 1967 and Serbia has an embassy in Canberra.

Two-way bilateral merchandise trade in 2012 was A$19.5 million with the balance in Serbia's favour. Main Australian exports  were specialised machinery and parts; raw hides and skins; hand or manufacture tools; and mineral manufactures. The main imports from Serbia were prepared or preserved fruit and vegetables; electric power machinery and parts; and edible products and preparations. Australia and Serbia signed an air services agreement in May 2013. A Memorandum of Understanding to combat international money-laundering was signed in February 2012. In June 2013, Australia and Serbia held the first round of negotiations toward a bilateral Social Security Agreement.

An Australian Parliamentary delegation visited Serbia in October 2008. Mr Ivica Dačić, then Serbian First Deputy Prime Minister and Minister of the Interior, visited Australia in February 2012.

Political Overview

The National Assembly of the Republic of Serbia is a 250-seat unicameral legislative body. Deputies are elected for four-year terms under a 'party list' system. The President of Serbia, currently Mr Tomislav Nikolić, is directly elected for a five-year term, and nominates the prime minister in consultation with the National Assembly. The President's role is largely ceremonial.

Serbia's most recent parliamentary and presidential elections were held concurrently on 6 May 2012. Presidential elections went to a second round of voting, with Mr Tomislav Nikolić (49.76 per cent) of the Serbian Progressive Party eventually winning out over incumbent Mr Boris Tadić (47.15 per cent) from the Democratic Party.

The parliamentary elections produced a tight result, split between the opposition Serbian Progressive Party (24.04 per cent), the incumbent coalition government led by the Democratic Party (22.11 per cent), and the Socialist Party of Serbia (14.53 per cent). After nearly two months of negotiation, a new coalition government led by Prime Minister Ivica Dačić (Socialist Party of Serbia) was sworn in on 27 July 2012.

Serbia and the Republic of Kosovo

On 17 February 2008, Kosovo, formerly an autonomous province within the Republic of Serbia, declared independence. Australia recognised the Republic of Kosovo as an independent state on 19 February 2008. To date, over 91 countries have recognised Kosovo's independence, including the United States, the United Kingdom, France and Germany. On 9 September 2010, the UN General Assembly adopted a joint Serbian-EU resolution on Kosovo by consensus. The resolution acknowledged the July 2010 International Court of Justice advisory opinion (finding that the declaration of independence by Kosovo did not violate international law) and welcomed EU facilitation of dialogue between the parties. Serbia maintains that the resolution is a 'status neutral document' and does not equate to recognition of the unilateral independence of Kosovo. The 'Belgrade–Pristina Dialogue', which commenced in March 2011, focuses on issues of technical cooperation, such as regulating borders and customs, economic cooperation and joint initiatives against organised crime.

On 10 September 2012, the International Steering Group (ISG) agreed to end supervised independence of Kosovo. At the beginning of July Kosovo's institutions adopted the necessary constitutional and legal amendments to end the supervised independence. This was coupled with a law extending EULEX's mandate until mid-2014.

On 19 April 2013, Serbia and Kosovo reached a significant agreement on principles for the normalisation of relations. The agreement came following several rounds of negotiations in a dialogue process facilitated by the EU’s High Representative for Foreign Affairs and Security Policy, Baroness Catherine Ashton. Both sides are working towards the implementation of the agreements.

Progress towards European Union membership

Serbia submitted its formal bid for EU candidate status in December 2009. On 19 January 2011, the European Parliament ratified the EU Stabilisation and Association Agreement with Serbia, which establishes the framework for EU engagement with applicant countries. The EU granted Serbia official candidate status in March 2012.

In December 2012, the Council launched the accession process with a view to opening negotiations in June 2013, provided that political conditions regarding cooperation with Kosovo were met. On 22 April 2013, following an announcement that the governments of Serbia and Kosovo had completed an agreement that was hailed as a major step towards normalising relations, the European Commission recommended the start of EU entry talks with Serbia. On June 28, 2013 the European Council endorsed the Council of Ministers conclusions and recommendations to open accession negotiations with Serbia, and announced that they would commence by January 2014 at the latest. The following day, the Head of the EU Delegation to Serbia, Vincent Degert, stated that the screening of the acquis had commenced.

Economic Overview

Serbia's post-Milosević economic progress was substantial prior to the global economic crisis. Driven primarily by Serbia's membership aspirations to the European Union (EU) and in the World Trade Organization (WTO), economic reform moved forward in many areas, but challenges remain. Privatization is far from complete and more than 31 per cent of the workforce is employed by state-owned enterprises or government. Unemployment, a lack of liquidity in the economy, corruption and labour unrest are central to continuing political and economic problems.

The global economic crisis caused Serbia's GDP growth to fall from 3.8 per cent in 2008 to -3.5 per cent in 2009. While 2010-11 saw the beginning of recovery, the crisis in the euro zone and Serbia's exposure to it through trade, investment and banking linkages have resulted in ongoing economic problems. The economy fell into recession in June 2012 after GDP growth plummeted to 0.1 per cent.

In September 2011, Serbia and the IMF reached an agreement giving Serbia access to up to one billion euros through a Stand-By Arrangement (SBA). The IMF stated the objectives of the agreement were three-fold: to insulate Serbia from external shocks, to promote tightening of fiscal policy and to improve the investment climate in the country. The IMF suspended the SBA in February 2012 due to loose budgetary policy and general non-compliance.

Inflation and price increases on controlled products and services, such as public transportation, electricity, and natural gas, have exacerbated the economic pressure on Serbians, whose average net incomes have stagnated. The official unemployment rate is estimated to be almost 28.3 per cent, but unofficially is much higher in the provinces and among women and minorities.

Updated August 2013